Chip-based payment cards have been mandated in the industry. It is believed that a chip-based card provides superior security because a transaction is only valid when the chip on the card is powered on and communicating with the card reader.
A popular trend that is growing in the industry is wireless chip-based cards that use radio waves captured in a card antenna to power the chip on. This allows for contactless transactions. Once the chip is powered on by the wireless radio signals, the chip generates a one-time use token that is provided to the card reader for a transaction. These contactless chip-based cards are tapped or waved in front of the card reader instead of being dipped or swiped into and through the card reader.
However, these contactless cards have antennas that are continually listening for a radio signal. The radio signal powers the chip and activates the card. Once activated, the chip generates a unique transaction token for conducting a transaction. Consequently, thieves have figured out that all they need to is provide a wireless radio signal near someone possessing a chip-based contactless card and the card is activated, such that a transaction can be performed using the card and the generated transaction token.
Accordingly, because of the increasing use of contactless payment cards, theft is becoming more commonplace because such cards are not as secure as was originally believed to be the case in the industry.